Haemonetics(R) Reports Solid Operating Results for Third Quarter Fiscal 2007

BRAINTREE, Mass., Jan. 31 /PRNewswire-FirstCall/ -- Haemonetics Corporation reported third quarter fiscal 2007 GAAP net revenue of $114 million, up 7.4% over prior year, and earnings per share of $0.62, down from $1.01 in the third quarter of last year. Last year's comparison includes a $0.61 per share benefit of a non-operating arbitration award.

Adjusted earnings per share for the quarter, excluding certain charges and benefits(1), were $0.55 for the quarter, up 34.5%.

Brad Nutter, Haemonetics' President and CEO, said, "I'm pleased that we continue to deliver solid financial performance. Over the last three years we've consistently achieved double digit operating income growth on high single digit revenue growth. This quarter was the same. Adjusted for certain charges and benefits(1) we delivered 30% operating income growth on 7% revenue growth."

SUMMARY FINANCIAL RESULTS GAAP results versus FY06 are as follows: * Revenue of $114 million for Q3:07, up 7.4%, and $333 million year-to- date, up 7.5% * Gross profit of $56 million for Q3:07, up 1.3%, and $169 million year- to-date, up 4.3% * Operating expense of $39 million for Q3:07, up 171.3%, and $132 million year-to-date, up 51.1% * Operating income of $17 million for Q3:07, down 58.7%, and $37 million year-to-date, down 50.4% * Earnings per share of $0.62 for Q3:07, down 38.8%, and $1.06 year-to- date, down 43.5% * Gross margin of 49.7% for Q3:07, down 300 basis points, and 50.8% year- to-date, down 160 basis points * Operating margin of 15% for Q3:07, down 2390 basis points, and 11.1% year-to-date, down 1300 basis points Adjusted(1) results versus FY06 are as follows: * Revenue of $114 million for Q3:07, up 7.4%, and $333 million year-to- date, up 7.5% * Gross profit of $56 million for Q3:07, up 1.4%, and $169 million year- to-date, up 4.4% * Operating expense of $37 million for Q3:07, down 9.0%, and $112 million year-to-date, down 0.6% * Operating income of $19 million for Q3:07, up 29.7%, and $57 million year-to-date, up 16.1% * Earnings per share $0.55 for Q3:07, up 34.5%, and $1.52 year-to-date, up 18.8% * Gross margin of 49.7% for Q3:07, down 300 basis points, and 50.8% year- to-date, down 160 basis points * Operating margin of 17.1% for Q3:07, up 290 basis points, and 17.0% year-to-date, up 120 basis points * Tax rate of 31.0% in Q3:07 vs. 32.8% in Q3:06, and 33.5% year-to-date, versus 34.2% in prior year BALANCE SHEET

Year-to-date, Haemonetics' cash declined $23 million, for a cash balance of $228 million. In Q3 Haemonetics completed a $40 million share repurchase program initiated in Q2. The Company repurchased 853,000 shares under the program. The Company generated $26 million in cash flow from operating activities for the quarter and $59.4 million year-to-date, and achieved record low DSO (days sales outstanding).

DONOR PRODUCT LINE

Worldwide plasma disposables revenue was $32 million for the quarter, up 17.8% over Q3:06, and $96 million year-to-date, up 19.3%. Plasma disposable sales benefited from continued growth in U.S. and European plasma collections and from several new customer contracts. Haemonetics also announced a new contract with Talecris Plasma Resources, valued at over $120M over five years, to supply Talecris centers with the Company's plasma collection systems and 5D software services. Talecris is one of the three global leaders in plasma collection and fractionation. It recently purchased 58 plasma collection centers from International BioResources, ("IBR").

Stephen Swenson, Haemonetics' VP & General Manager of Global Plasma, said, "IBR was a Haemonetics customer and we are pleased to be retaining this business. We are also excited about the growth outlook for Talecris." Thirty-three Talecris centers operate today and another 25 are planned to open over the next year.

Worldwide blood bank disposables revenue was $31 million for the quarter, down 7.8% from Q3:06, and $94 million year-to-date, down 4.5%. The majority of blood bank sales are platelet disposables. The Company continued to experience a changing market place in Japan.

Red cell disposables revenue benefited from unit growth in both the U.S. and Europe. Worldwide red cell disposables revenue was $11 million for the quarter, up 19.6% over Q3:06, and $32 million year-to-date, up 20.4%. Automation continues to be driven by customer interest in improving blood availability as well as operational efficiency.

PATIENT PRODUCT LINE

The Company reported ongoing progress in its transition to direct U.S. sales of the OrthoPAT(R) system. U.S. OrthoPAT disposables revenue grew 53.2%. Worldwide OrthoPAT disposables revenue was $7 million, up 31.5% over Q3:06, and $22 million year-to-date, up 39.9%. OrthoPAT revenue growth was driven by U.S. price improvement.

Surgical disposables revenue, principally Cell Saver(R) systems, was $17 million in the quarter, up 1.2% from Q3:06, and $49 million year-to-date, level with prior year. As previously stated, the market served by the Cell Saver 5+ is a mature market.

OTHER PRODUCTS

Equipment sales in the quarter were $5 million, down 10.6% from Q3:06, and $15 million year-to-date, down 18.0%. Equipment sales vary from quarter to quarter and year to year. In the year, Haemonetics is comparing against strong FY06 equipment sales stemming from the introduction of the Cell Saver 5+ system and sales of ACP(R) 215 systems.

Sales designated "Services and Miscellaneous," driven by the service offerings of the Company's 5D(TM) Information Management division, grew to $9 million in the quarter, up 33.9% over Q3:06, and $24 million year-to-date, up 19.4%. 5D's growth is being driven principally by two factors: 1) new contracts with the US Department of Defense relating to the military's blood supply, and 2) increasing plasma collections at Haemonetics' plasma customers served by 5D information systems. The Company also announced that as part of the Talecris plasma contract noted above, 5D will automate Talecris' plasma centers with its proprietary information management systems.

Brad Nutter said, "Our information management and services business that includes 5D continues to grow rapidly. On a year-to-date basis, this business is now of a size comparable to our OrthoPAT and red cell product lines. This sales growth is having a meaningful impact on total revenues."

Haemonetics recently announced the acquisition of IDM Medical Software, a company whose proprietary information technology for blood banks will complement 5D's suite of software products for the plasma industry. The combination of these two market leaders in the growing market of information management systems to manage the blood supply chain will enable Haemonetics to build an "information super highway" in support of its vision to be the global leader in blood management solutions. IDM's annual GAAP revenues are more than $6 million.

FY07 GUIDANCE

FY07 guidance on adjusted results should be measured against adjusted FY06 results.

Haemonetics' revenue continues to be impacted by sales declines in the Japanese business. As a result, annual FY07 guidance on adjusted results is updated to:

* Revenue growth of 7-9% * Gross margin of approximately 51% * Operating income growing low double digits * Operating margins improving to approximately 18% * Earnings per share in the range of $2.05 to $2.17

For comparison purposes, the FY06 adjusted results exclude the benefit of an arbitration award received Q3:06 which added $26.4 million to operating income and $0.62 to earnings per share.

The FY07 guidance is based on anticipated annual results, adjusted to exclude five items: 1) the impact from stock compensation expense (FAS 123R), expected to be approximately $10 million (pre-tax), or $0.25 per share with costs spread throughout the year; 2) a restructuring charge of $3-4 million (pre-tax), or $0.07 to $0.09 per share, with costs spread throughout the year; 3) an in-process R&D charge of $9 million (pre- and after tax), or $0.34 per share, related to the Company's acquisition of Arryx in Q2:07; 4) a one-time tax benefit of $4 million, or $0.13 per share, in the third quarter and year-to-date; and 5) receipt during the fourth quarter of $6 million in settlement of a legal claim against Baxter Healthcare.

Haemonetics' FY07 GAAP earnings per share guidance is $1.62 to $1.76. CONFERENCE CALL

Haemonetics will hold a conference call on Wednesday, January 31st at 10:00 am Eastern to discuss these results. Interested parties can participate in the conference call by dialing (800) 690-3108 (U.S. only) or (973) 935-8753 with conference ID 8282786. The call will be replayed through February 14th at (877) 519-4471 (U.S. only) or (973) 341-3080 using PIN 8282786.

Haemonetics is a global company engaged in the design, manufacture and worldwide marketing of automated blood processing systems. These systems address important medical markets: surgical blood salvage, blood component collection, plasma collection, and blood component safety. To learn more about Haemonetics' products and markets, visit its web site at http://www.haemonetics.com/.

Haemonetics has presented supplemental non-GAAP financial results as part of this release which exclude the resolution of a tax contingency, stock compensation expense, restructuring costs, and an in-process research and development charge and other unusual items associated with the acquisition of Arryx. Haemonetics believes that a presentation of these non-GAAP results are useful to investors because it allows for an evaluation of the Company with a focus on the results of our core business.

This release contains forward-looking statements that involve risks and uncertainties, including technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive. The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements.

(1) As indicated in the attachment titled, "Consolidated Statements of Income Adjusted for the Effect of Stock Based Compensation Expense, Restructuring Costs, Arryx IPRD, and Other Unusual Charges." Haemonetics' FY07 GAAP financial results include three, previously announced, items:

* FAS 123R required stock option expense (pre-tax) charges of $2 million, or $0.06 per share, for the quarter, and $7 million, or $0.19 per share, year-to-date; * restructuring costs in connection with changes to the Company's international operations resulting in (pre-tax) charges of $0.3 million, or $0.01 per share, for the quarter, and $3 million, or $0.07 per share, year-to date; and, * an in-process R&D charge arising from the second quarter acquisition of Arryx resulting in a (pre- and after tax) charge which had no impact on the quarter, but resulted in a charge of $9 million, or $0.34 per share, year-to-date

Additionally, Haemonetics announced today that it has received a one-time tax benefit from a resolution of tax contingencies resulting in a benefit of $4 million, or $0.13 per share, for the quarter and year-to-date.

HAEMONETICS CORPORATION FINANCIAL SUMMARY (UNAUDITED DATA IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENTS OF INCOME FOR THE THIRD QUARTER FYE07 % Inc/(Dec) 12/30/06 12/31/05 vs Prior As Reported As Reported Year NET REVENUES $113,527 $105,677 7.4% Gross profit 56,419 55,669 1.3 R&D 5,804 9,463 (38.7) S,G&A 33,610 31,250 7.6 Arbitration Award - Baxter 0 (26,350) ---- Cost to Equity 0 165 ---- Operating expenses 39,414 14,528 171.3 Operating income 17,005 41,141 (58.7) Interest expense (342) (435) (21.4) Interest income 1,925 2,875 (33.0) Other income/(expense), net 816 742 10.0 Income before taxes 19,404 44,323 (56.2) Tax expense 2,503 16,399 (84.7) NET INCOME $16,902 $27,924 (39.5) Net income per common share assuming dilution $0.62 $1.01 (38.8%) Weighted average number of shares Basic 26,527 26,542 Diluted 27,367 27,646 Inc/(Dec) vs prior year 12/30/06 12/31/05 profit Profit Margins: As Reported As Reported margin % Gross profit 49.7% 52.7% (3.0%) R&D 5.1% 9.0% (3.9%) S,G&A 29.6% 29.6% ---- Operating income 15.0% 38.9% (23.9%) Income before taxes 17.1% 41.9% (24.8%) Net income 14.9% 26.4% (11.5%) CONSOLIDATED STATEMENTS OF INCOME FOR FYE07 YEAR TO DATE % Inc/(Dec) 12/30/06 12/31/05 vs Prior As Reported As Reported Year NET REVENUES $332,688 $309,338 7.5% Gross profit 168,953 161,958 4.3 R&D 17,345 21,287 (18.5) S,G&A 105,258 91,841 14.6 Arbitration Award - Baxter 0 (26,350) ---- In Process R&D 9,073 0 ---- Cost to Equity 225 527 (57.3) Operating expenses 131,901 87,305 51.1 Operating income 37,052 74,653 (50.4) Interest expense (1,187) (1,498) (20.8) Interest income 5,902 5,271 12.0 Other income/(expense), net 2,153 2,087 3.2 Income before taxes 43,920 80,513 (45.4) Tax expense 14,595 29,122 (49.9) NET INCOME $29,324 $51,391 (42.9) Net income per common share assuming dilution $1.06 $1.87 (43.5%) Weighted average number of shares Basic 26,838 26,406 Diluted 27,754 27,413 % Inc/(Dec) 12/30/06 12/31/05 vs Prior Profit Margins: As Reported As Reported Year Gross profit 50.8% 52.4% (1.6%) R&D 5.2% 6.9% (1.7%) S,G&A 31.6% 29.7% 1.9% Operating income 11.1% 24.1% (13.0%) Income before taxes 13.2% 26.0% (12.8%) Net income 8.8% 16.6% (7.8%) REVENUE ANALYSIS FOR THE THIRD QUARTER FYE07 12/30/06 12/31/05 As Reported As Reported % Inc/(Dec) Revenues by Geography United States $49,819 $40,077 24.3% International 63,708 65,600 (2.9) Net Revenues $113,527 $105,677 7.4 Disposable Revenues by Product Family Donor: Plasma $32,362 $27,461 17.8 Blood Bank 30,954 33,588 (7.8) Red Cell 11,132 9,304 19.6 $74,448 $70,353 5.8 Patient: Surgical 16,989 16,791 1.2 Orthopat 7,491 5,697 31.5 $24,480 $22,488 8.9 Subtotal $98,928 $92,841 6.6 Equipment $5,194 $5,813 (10.6) Misc & Service 9,405 7,023 33.9 Net Revenues $113,527 $105,677 7.4% REVENUE ANALYSIS FOR FYE07 YEAR TO DATE 12/30/06 12/31/05 As Reported As Reported % Inc/(Dec) Revenues by Geography United States $143,050 $116,230 23.1% International 189,638 193,108 (1.8) Net Revenues $332,688 $309,338 7.5 Disposable Revenues by Product Family Donor: Plasma $96,253 $80,702 19.3 Blood Bank 93,998 98,471 (4.5) Red Cell 32,105 26,662 20.4 $222,356 $205,835 8.0 Patient: Surgical 49,298 49,281 ---- Orthopat 22,132 15,822 39.9 $71,430 $65,103 9.7 Subtotal $293,786 $270,938 8.4 Equipment $15,207 $18,547 (18.0) Misc & Service 23,695 19,853 19.4 Net Revenues $332,688 $309,338 7.5% Consolidated Balance Sheets Period ending 12/30/06 4/1/06 (1) Assets Cash & cash equivalents $227,707 $250,667 Accounts receivable, net 85,988 86,901 Inventories, net 59,680 54,571 Other current assets 25,138 26,265 Total current assets 398,513 418,404 Net PP&E 84,050 75,266 Other assets 67,305 51,787 Total assets $549,868 $545,457 Period ending 12/30/06 4/1/06 (1) Liabilities & Stockholders' Equity S/T debt & current maturities $23,248 $26,176 Other current liabilities 62,701 61,940 Total current liabilities 85,949 88,116 Long-term debt 6,828 12,977 Other long-term liabilities 3,747 3,800 Stockholders' equity 453,344 440,564 Total liabilities & equity $549,868 $545,457 THIRD QUARTER FYE07 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES Effect of Resolution Stock Based 12/30/06 of Tax Compensation As Reported Contingencies (3) Expense (4) NET REVENUES $113,527 $0 $0 Gross profit 56,419 0 (45) R&D 5,804 0 70 S,G&A 33,610 0 2,011 Operating expenses 39,414 0 2,081 Operating income 17,005 0 (2,126) Interest expense (342) 0 0 Interest income 1,925 0 0 Other income/(expense), net 816 0 0 Income before taxes 19,404 0 (2,126) Tax expense 2,503 (3,568) (594) NET INCOME $16,902 $3,568 ($1,532) Net income per common share assuming dilution $0.62 $0.13 ($0.06) Weighted average number of shares Basic 26,527 26,527 26,527 Diluted 27,367 27,367 27,367 12/30/06 As Reported Profit Margins: Gross profit 49.7% R&D 5.1% S,G&A 29.6% Operating income 15.0% Income before taxes 17.1% Net income 14.9% THIRD QUARTER FYE07 CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES Adjusted % Inc/(Dec) Restructuring 12/30/06 12/31/05 vs Prior Costs(5) As Adjusted(6) As Adjusted(7) Year NET REVENUES $0 $113,527 $105,677 7.4% Gross profit 0 56,464 55,669 1.4 R&D 0 5,734 9,463 (39.4) S,G&A 265 31,334 31,250 0.3 Operating expenses 265 37,068 40,713 (9.0) Operating income (265) 19,396 14,956 29.7 Interest expense 0 (342) (435) (21.4) Interest income 0 1,925 1,542 24.8 Other income/(expense), net 0 816 742 10.0 Income before taxes (265) 21,795 16,805 29.7 Tax expense (88) 6,753 5,504 22.7 NET INCOME ($177) $15,042 $11,301 33.1 Net income per common share assuming dilution ($0.01) $0.55 $0.41 34.5% Weighted average number of shares Basic 26,527 26,527 26,542 Diluted 27,367 27,367 27,646 Inc/(Dec) vs prior 12/30/06 12/31/05 year As Adjusted(6) As Adjusted(7) profit Profit Margins: margin % Gross profit 49.7% 52.7% (3.0%) R&D 5.1% 9.0% (3.9%) S,G&A 27.6% 29.6% (2.0%) Operating income 17.1% 14.2% 2.9% Income before taxes 19.2% 15.9% 3.3% Net income 13.2% 10.7% 2.5% FYE07 YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES Resolution Effect of Arryx IPRD of Tax Stock Based 12/30/06 and Other Contingencies Compensation Income Statement: As Reported Unusual(2) (3) Expense (4) NET REVENUES $332,688 $0 $0 $0 Gross profit 168,953 0 0 (157) R&D 17,345 0 0 244 S,G&A 105,258 0 0 7,019 In-Process R&D 9,073 9,073 0 0 Cost to Equity 225 225 0 0 Operating expenses 131,901 9,298 0 7,263 Operating income 37,052 (9,298) 0 (7,420) Interest expense (1,187) 0 0 0 Interest income 5,902 0 0 0 Other income/ (expense), net 2,153 0 0 0 Income before taxes 43,920 (9,298) 0 (7,420) Tax expense 14,595 0 (3,568) (2,125) NET INCOME $29,324 ($9,298) $3,568 ($5,295) Net income per common share assuming dilution $1.06 ($0.34) $0.13 ($0.19) Weighted average number of shares Basic 26,838 26,838 26,838 26,838 Diluted 27,754 27,754 27,754 27,754 12/30/06 As Reported Profit Margins: Gross profit 50.8% R&D 5.2% S,G&A 31.6% Operating income 11.1% Income before taxes 13.2% Net income 8.8% FYE07 YEAR TO DATE CONSOLIDATED STATEMENTS OF INCOME ADJUSTED FOR THE EFFECT OF STOCK BASED COMPENSATION EXPENSE, RESTRUCTURING COSTS & ARRYX IPRD AND OTHER UNUSUAL CHARGES Adjusted % Inc/(Dec) Restructuring 12/30/06 12/31/05 vs Prior Costs(5) As Adjusted(6) As Adjusted(7) Year Income Statement: NET REVENUES $0 $332,688 $309,338 7.5% Gross profit 0 169,110 161,958 4.4 R&D 0 17,101 21,287 (19.7) S,G&A 2,932 95,307 91,841 3.8 In-Process R&D 0 0 0 --- Cost to Equity 0 0 0 --- Operating expenses 2,932 112,408 113,128 (0.6) Operating income (2,932) 56,702 48,830 16.1 Interest expense 0 (1,187) (1,498) (20.8) Interest income 0 5,902 3,938 49.9 Other income/ (expense), net 0 2,153 2,087 3.2 Income before taxes (2,932) 63,570 53,357 19.1 Tax expense (1,004) 21,292 18,227 16.8 NET INCOME ($1,928) $42,278 $35,130 20.3 Net income per common share assuming dilution ($0.07) $1.52 $1.28 18.8% Weighted average number of shares Basic 26,838 26,838 26,406 Diluted 27,754 27,754 27,413 Inc/(Dec) vs prior year 12/30/06 12/31/05 profit Profit Margins: As Adjusted(6) As Adjusted(7) margin % Gross profit 50.8% 52.4% (1.6%) R&D 5.1% 6.9% (1.8%) S,G&A 28.6% 29.7% (1.1%) Operating income 17.0% 15.8% 1.2% Income before taxes 19.1% 17.2% 1.9% Net income 12.7% 11.4% 1.3% (1) Reflects the adjustment to convert our investment in Arryx, Inc. to the equity method. (2) IPRD and Cost to Equity impact of Arryx acquisition. (3) Income tax expense was reduced during the quarter due to the finalization of an audit of prior year income tax returns. (4) Stock based compensation expense related to the adoption of FAS 123R. (5) Restructuring costs primarily include severance and related costs associated with eliminating or reorganizing certain positions in our international business operations. (6) "As Adjusted" for FY 07 is comprised of "As Reported" less the "Effect of Stock Based Compensation," "Restructuring Costs" & "Arryx IPRD and Other Unusual Charges." (7) "As Adjusted" for FY 06 excludes the restatement of our financial results to reflect our investment in Arryx on the equity method and the elimination of the Arbitration Award from Baxter. CONTACT: Julie Fallon Tel. (781) 356-9517 Alternate Tel. (617) 320-2401 fallon@haemonetics.com